| |
Reforms at long last
The Chinese government has finally woken up to the urgency of toning up its financial sector and has come out with plans to revamp the nation's central bank and overhaul the financial segment generally. This belated measure is inconsistent with the speed at which the economy has been sought to be modernised since 1978. One can hardly explain rationally why nobody in Beijing had not bothered all this long to alter the financial system in concert with the introduction of a free market economy in place of a mechanism that was centrally controlled. Anyway, such neglect has played havoc with the quality of management of the economy, though its consequences have been glossed over in the wake of the cataclysmic transformation of Chinese industry in the last two decades. Strains on the financial system, particularly the overheating, emerged from time to time, but for some inexplicable reason the authorities did not care to deal summarily with the anachronism of a financial sector.Any how, now that the central bankgovernor has come out with a strategy for streamlining the financial system, the kind of anarchy that was witnessed from time to time should not re-emerge again in the coming years. Yet, it is going to be very difficult for the People's Bank of China to implement the plan of action unfolded last Friday. For instance, the elevation of the central bank itself to the stature that the US Federal Reserve enjoys is going to be a herculean task. A political commitment is not going to prove sufficient for such a drastic transformation. More than the administrative steps, what is important is whether the leadership will allow the central bank to become as autonomous and fearsome as the US Federal Reserve.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
|
 |
